Table 5.3 King Supply Makes Four Different Types of Plumbing Fixtures: W

question 72

Multiple Choice

Table 5.3
King Supply makes four different types of plumbing fixtures: W, X, Y and Z. The contribution margins for these products are: $70 for Product W, $60 for Product X, $90 for Product Y and $100 for Product Z. Fixed overhead is estimated at $5,500 per week. The manufacture of each fixture requires four machines, Machines #1, 2, 3 and 4. Each of the machines is available for 40 hours a week and there is no setup time required when shifting from the production of one product to any other. The processing requirements to make one unit of each product are shown in the table. Weekly product demand for the next planning period has been forecasted as follows: 70 Ws, 60 Xs, 50 Ys and 30 Zs.

In the questions that follow, the traditional method refers to maximizing the contribution margin per unit for each product, and the bottleneck method refers to maximizing the contribution margin per minute at the bottleneck for each product.
-Use the information in Table 5.3. Using the traditional method, what is the optimal product mix?

• A) 70 W, 60 X, 90 Y, 100 Z
• B) 70 W, 50 X, 50 Y, 30 Z
• C) 70 W, 60 X, 47 Y, 30 Z
• D) 70 W, 47 X, 50 Y, 30 Z

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Definitions:

Operating Results

The outcome of a company's main business activities, including profit or loss, before considering the effects of non-operational income and expenses.

Factory Overhead

Factory overhead includes indirect costs incurred during the manufacturing process, such as utilities, depreciation, and salaries for supervisors that cannot be directly traced to specific units of production.

Manufacturing Process

A sequence of operations or steps used to convert raw materials into finished products through physical, chemical, or mechanical means.

Organization's Objectives

The specific goals a company seeks to achieve, guiding its operations and strategy, typically aimed at growth, profitability, and customer satisfaction.